Kuwait’s KPC draws investors to possible $7bn pipeline deal

Kuwait’s national oil company KPC has held early stage talks with a group of potential investors over a $7 billion stake sale in its crude oil pipelines, according to sources. It follows similar moves by Saudi Arabia and the UAE.

BlackRock, Brookfield Asset Management, EIG Partners and buyout group KKR are among those that have apparently shown interest.

Chinese state enterprises China Silk Road Fund and China Merchants Capital, along with I Squared Capital and Macquarie Infrastructure Partners, are also keen, the sources said.

The transaction is thought to be structured with around $1.5 billion in equity and the remainder financed through debt.

Sheikh Nawaf Saud Al-Sabah, KPC’s deputy chairman and chief executive, is leading a steering committee overseeing the process, which is described as being managed with close, hands-on oversight, with the committee convening every few weeks to monitor progress.

“We are studying the possibility of leasing and re-leasing (oil) pipelines in the country,” Al-Sabah told reporters in September.

“The pipelines are assets owned by KPC and do not generate direct financial returns. If there is an opportunity to secure additional financing through these assets … then welcome,” he said.

BlackRock, Brookfield, Macquarie, KKR, EIG and I Squared declined to comment. KPC, China Silk Road Fund and China Merchants Capital did not respond to requests for comment.

KPC is approaching other banks to join HSBC in underwriting the debt portion of the deal, the sources said.

They added that the process to formally launch the oil pipeline network stake sale could start as soon as the end of this month.

The concession, believed to span 25 years, faces a testing backdrop. Crude oil hovering around $71 per barrel is weighing on projected volumes and returns, with geopolitical tensions in the Gulf presenting an additional layer of complexity, one of the sources said.

Further reading:

• BlackRock-led group to invest $10bn in Aramco gas project
• Gulf oil giants raise billions from infrastructure deals
• BlackRock buys stake in Saudi-Bahraini oil pipeline

The move echoes deals in recent years by Saudi Aramco, Abu Dhabi National Oil Company and Bahrain’s Bapco Energies to raise funds from their pipeline infrastructure networks. Such deals provide upfront cash in return for tariff payments over time.

Kuwait Petroleum Corp in late 2023 said it will spend $410 billion through to 2040 on a strategy that aims to boost production capacity to 4 million barrels per day.

BlackRock, which last year signed a similar deal for Aramco’s Jafurah gas project processing facilities in Saudi Arabia, will open an office in Kuwait and has appointed Ali AlQadhi to lead operations in the country, Kuwait’s state news agency said in September.